Mizuho Suggests Qualcomm Acquire One of Two Chip Companies Instead of Intel

Mizuho analysts suggest that Qualcomm would be better suited to acquire alternative chip companies instead of pursuing a deal with Intel.

A recent report indicated that Qualcomm had approached Intel regarding a potential takeover. However, Mizuho highlights that any acquisition of Intel would likely encounter significant regulatory challenges, particularly from China. The firm notes that foreign entities, including Qualcomm, are generally not favored by the Chinese government, which could lead to substantial resistance from both Chinese and international regulators.

Given the geopolitical and regulatory landscape, Mizuho believes that an acquisition involving Qualcomm and Intel would likely be blocked. They state that “China would never approve” such a deal aimed at assisting a major US company that is facing difficulties.

Mizuho points out that this outlook is supported by historical precedent, as China previously halted Qualcomm’s attempt to acquire NXP Semiconductors, despite there being minimal overlap between the two companies.

Instead of Intel, Mizuho proposes two alternative acquisition targets for Qualcomm. The first is MRVL, which boasts a market capitalization in the low $60 billion range and is seen as a strategic fit. According to Mizuho, acquiring Marvell would provide Qualcomm with higher gross margins and enhance its assets for AI and data center applications. Marvell’s strong positions in high-speed data center interconnects and silicon photonics make it a more attractive candidate for acquisition.

The second suggestion is CRDO, which has a market cap of around $5 billion. While smaller in comparison, Credo is recognized for its promising technology in the rapidly growing areas of data center interconnects and optical components. Mizuho acknowledges that while an acquisition of CRDO may not significantly impact Qualcomm’s financials, it represents a more realistic and strategically sound option compared to the complexities associated with Intel.

Mizuho encourages Qualcomm to explore these alternatives, asserting that they better align with the company’s strategic goals and present fewer regulatory hurdles.